THE WALL STREET JOURNAL

Natural Gas Gets Boost as Oversupply Fears Weaken

Weekly surpluses have fallen sharply from earlier in the
summer


By Timothy Puko / Updated Aug. 14, 2015 3:18 p.m. ET


Natural gas prices rebounded slightly Friday as warm temperatures and smaller weekly surpluses
have calmed fears that the country’s stockpiles will near capacity going into the winter.
The front-month September contract settled up 1.4 cents, or 0.5%, to $2.801 a million British
thermal units on the New York Mercantile Exchange. Trading stayed within a 5.5-cent range and
settled in the middle of a 25-cent range futures have closed in every day for more than two
months.


Trading is largely limited to book-squaring moves on Fridays like this one as traders work
primarily to limit exposure going into the weekend without much other news to jolt the market,
analysts said.


Support has come as weekly surpluses have fallen sharply from earlier in the summer. Prices slid
yesterday after data showed a 65-billion-cubic feet addition to stockpiles last week, about 18%
more than expected. But, in the bigger picture, the addition is far below the 79 bcf added during
this week last year and the additions of more than 90 bcf that started in July.


These weekly surpluses have declined as power plants consume a record amount of gas this year.
Hot weather has kept demand high for gas-fired power to fuel air conditioners, and Friday’s
forecasts show that trend continuing in the coming days, analysts said.


It is calming fears that large surpluses could have nearly filled storage before the beginning of
winter heating season. That possibility had several analysts forecasting steep price declines for
the end of summer and the fall, but they have pulled back in recent days.


On Friday, Simmons & Co. International became the latest bank to say there will be less gas in
storage going into the winter than previously expected. It cut its forecast to 3.9 trillion cubic feet,
down from 4 tcf.


“With more room in storage and the possibility of heavier (autumn) demand ahead, we expect
that the industry will avert a collapse in price this season,” Teri Viswanath, a natural-gas
strategist at BNP Paribas SA in New York, said in a note. “While we anticipate more price
deterioration ahead, it looks increasingly doubtful that natural gas futures will establish a new
low.”


Write to Timothy Puko at tim.puko@wsj.com


FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND
MAY NOT BE SUITABLE FOR EVERYONE. OPTIONS, CASH AND FUTURES
MARKETS ARE SEPARATE AND DISTINCT AND DO NOT NECESSARILY
RESPOND IN THE SAME WAY TO SIMILAR MARKETS STIMULUS. A MOVEMENT
IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE
RELATED FUTURES & OPTIONS CONTRACT BEING OFFERED. SEASONAL
DEMAND AND CURRENT NEWS IN COMMODITIES ARE ALREADY REFLECTED
IN THE PRICE OF THE UNDERLYING FUTURES.